Financial bubbles 101 (for techies) - put simple series

"The bubbles 101 for techies. Put simple" describes financial bubbles anatomy in common terms. It gives hints how bubbles work and why they grow. Since the phenomenon exists for a long time, there is
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"The bubbles 101 for techies. Put simple" describes financial bubbles anatomy in common terms. It gives hints how bubbles work and why they grow. Since the phenomenon exists for a long time, there is no way to stop it at once. The presentation gives suggestions how to cope with the situation and succeed.

Read an insider's opinion why venture capitalists actually are a financial derivative from PE, i.e. by nature similar to CDO: http://www.venturecompany.com/opinions/files/how_vcs_dig_their_grave.html

If you read the blog beyond the article there are several interesting points: + derivative's transparency tends to be low + uncontrolled derivatives tend to be valued more than they actually are + overvalued derivatives inevitably kill the very essence they've been created for - by going sub-prime - by 'stealing' resources from everything that creates real social-economic value - the resources are awarded for good appearance aka short-lived skin-deep beauty, i.e. hot air for a bubble.

glad it resonated with you. Thank you for covering the story and encouraging feedback.

I would extend the applicability of the presentation. The dotcom issue is surely the case, but the recent housing crisis is a similar specie too, no significant difference. The mechanics of CDO is different. The origin of the value isn't anchored in the technology community. The idea -though- is the same: sell a value substitute as a value, create a competitive market for this 'value', buzz and profit.

My point is that the entire economy is a bubble. This is true for the USA and for the rest of the World. The only difference is, how much hot air pumps the wealth of different regional markets. As I mentioned for the US it is some 80%.

Bubbles burst if they are overinflated in comparison to other bubbles (by economic sector.) The overvaluation during the Great Depression was around 30 to 50%. It was enough to explode. I think, it was because the agicultural-economy was real. The 30-50 was a striking difference. Today the consolidated and corporations-controlled US agricultural economy is a bubble itself. The 80% of hot air seems to cause less difference in value perception. All IMHO.

EnergyDude, it is called irony. And I think it is appropriate here. Or explain, how the described here state in our society can be swallowed by any normal mind without an outburst of rage enegry? ;) And yet we need cold-minded actions to change the situation, not the emotions. From this perspective, your constructive improvement ideas are welcome.

As for the audience, the preso has been placed in the education section.

37.
By all means 5 hold the ground An entrepreneur might think to lure a spoiled investor by the inadequate riches. Don’t! The later bubble stage is entrepreneur’s ally. Spoiled guys will die off. Don’t go there along.